Load vs. No-Load
Load is the very first fee to be wary of when it comes to investing in mutual funds. It is just one of the reasons I dislike mutual funds and prefer ETFs, but that is a story for later.
There are two types of loads:
- front-load is paid at the time you purchase the mutual fund
- back-end or deferred load is paid at the time you sell the mutual fund
Loads can typically be 5.75%. Using that number as an example, if you wanted to invest $10,000 in the Swindlex Front-Load Growth Fund, you would lose $575 instantly to the front-load fee. Fail!
There is really no reason to use a load fund to invest. If someone in the financial industry is suggesting a load fund to you it is because the load represents his/her commission. That’s right, they are trying to make a quick buck off of your hard earned investing dollars!
Are you wondering who that is in the picture? It’s a photo of the last person who bought a front-load mutual fund. Since you’re reading this article that monkey will never be you. Huzzah!
fabulous image courtesy of unusualimage
